Interview: Mahmood H Alkooheji
As a holding company with a wide array of legacy assets in Bahrain, how can you describe the role of Mumtalakat in the local economy?
MAHMOOD H ALKOOHEJI: Mumtalakat helps to grow the wealth of Bahrain through investments in prospective and successful companies. We also play an important role in the overall growth of the kingdom’s economy, with stakes in 30 local companies, creating more than 13,400 direct employment opportunities.
At the same time we support the growth of our local portfolio and have established a number of new ventures. For example, we entered a partnership to develop the first regional copper tube manufacturing facility in Bahrain, which is scheduled to open in 2018. It will create jobs and further enhance manufacturing exports, which currently account for 20% of GDP. In 2017 we established two new companies in Bahrain, Mazad and Danat, and have also been investing in real estate through our real estate arm, Edamah.
While we have pursued economic development ventures, we have also played a significant role in stabilising some of the country’s key sectors and companies by financing and restructuring strategic assets. Our efforts have resulted in more than BD800m ($2.1bn) injected into legacy assets, including the national carrier of the kingdom, Gulf Air, and the Formula 1 racetrack, Bahrain International Circuit, located in Sakhir.
How has the oil price drop affected regional investment trends, and what impact does this have on the business operations of Mumtalakat?
ALKOOHEJI: Regional non-oil growth is set to climb to approximately 3%. In Bahrain non-oil sector growth increased to 4.8% in 2017 and collectively the sector generated more than 80% of total GDP. While low oil prices have affected economic conditions, leading a number of sovereign wealth funds (SWFs) to become more cautious in their investment approaches, Mumtalakat isn’t exposed to oil price fluctuations as we are vested with assets rather than hydrocarbons revenues. We adopted a self-sufficient business model and have not relied on government contributions. We finance ourselves solely through international financial markets and returns from our investments.
Having said that, the impact of the slowed economies worldwide has led SWFs to adopt more resilient approaches to investment, from cutting third-party costs to increasingly seeking co-investment opportunities and partnerships. This actually mirrors our own methods as we pursue joint ventures and co-investments, proactively seek diversification in our portfolio and maintain caution in relation to potential risks.
Co-investment provides benefits to all parties, including a secure source of funding, and an opportunity to be exposed to specific industry knowledge and regional expertise. Therefore, we aim to invest in companies with growth potential across multiple industries and geographies to achieve sustainable investment returns.
We specifically look to invest in sectors that address demographic changes and economic needs. For example, we invest in education as the unemployment global rate is at 13.1% and the private sector provides nine in 10 jobs worldwide. We continue to look for growing sectors, including renewables.
What is the significance of public-private partnerships in infrastructure development?
ALKOOHEJI: In today’s economic climate and amid ongoing budgetary constraints it has never been more important for governments to partner with the private sector to drive local economic growth, including infrastructure development. This is successful around the world, and we expect to see it accelerate in Bahrain as well as the government increasingly assumes the role of regulator, rather than operator, of all services. I have seen the importance personally while working with the Ministry of Finance to privatise a number of key public assets and to develop the national privatisation policy.
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